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The state of paraplanning: Which direction does the profession go from here?

One of the challenges facing paraplanners today is the risk they will study hard for roles they soon realise, once in the job, they do not need the qualifications for.

This is not to say being a paraplanner is easy. Far from it. The job requires great technical, analytical and communication skills, and good paraplanners are highly sought after.

A week after the New Model Business Academy finally got its funding to launch a paraplanner apprenticeship, Money Marketing looks at how the profession is set for development.

Are we there yet?

At this point it is worth noting there are no official figures for how many paraplanners there are in the UK, and guesses range from 1,600 to 9,000, compared with 25,000 registered financial advisers. The two issues of overqualification and not knowing how many paraplanners there are in the UK are linked by one underlying problem: there is still no consensus on what the role should involve.

For this reason there is a grey area in the advice sector; a group of people who we are not quite sure whether to call technical support, administrators or paraplanners, making it hard to calculate figures for each. It also means someone may study for a Level 4 exam and start work as a paraplanner, only to find they are expected to run errands like picking up dry cleaning for the boss who has a different idea of what the job involves.

This was a case Standards International founder and director Michelle Hoskin heard from one paraplanner.

Hoskin is clear that this lack of clarity is causing confusion for advice firm staff. She says: “Most paraplanners are really post-sales support. That is fine, but not if they are in a crisis of saying ‘I am a paraplanner, I want more money because I am called a paraplanner, but my jobs are basic administration that I did not need to sit my exams in order to do’.”

On the brighter side, The Paraplanners managing director Richard Allum says things have improved for paraplanners, not only because the work they do is so valued but also, in part, because of their scarcity.

He says: “Demand has definitely gone up. There are regional differences, but the salary they can expect has gone up significantly and the choice of where and how they work has improved as well.” Marketing and communication manager at recruitment agency BWD Search and Selection Bret Jackson says the trends he is seeing back up Allum’s view.

He says: “Average salaries have continued to increase year on year, in line with the value they offer to a business. As the need for them grows, obtaining good paraplanners also pushes up the salaries, and additional benefits are being utilised to entice people to move. Overall, salaries were up around 10 per cent on 2017.”

The BWD Salary and Benefit Census this year found the average salary for a paraplanner was £37,665, up from £35,611 in 2017 and £33,395 the year before that.

Jackson also notes changes in which types of firms are doing the recruiting. He says: “The advice market is constantly changing, and we have seen an increase in banks and advisory divisions of asset managers start to use paraplanners. Small IFA practices are unable to compete with the larger players, which is one of the reasons for the increase in trainees.”

For some firms struggling to recruit paraplanners, an alternative to training your own is to outsource. This is the route taken by the UK’s largest advice firm, St James’s Place. Its preferred partner for paraplanning provision is PlusGroup, which works exclusively with SJP.

Allum says plenty of other firms are going down this route too. He has watched the outsourced market boom after starting up his own outsourced paraplanning business in 2002, when there were only two firms in that space. Now there are between 50 and 75 similar companies.

Many of these are quality outfits. E-Paraplan recently became the first outsourced paraplanning firm to work towards the international Paraplanner Standard launched by Standards International in May this year.

Adviser view

Gemma Siddle
Financial planner, Eldon Chartered Financial Planners

While the role of paraplanner does vary significantly from firm to firm, this can be very good news too.

By their nature, everyone has their own preferences; be it for trusts or investment, having client contact or not. With the large variety of roles on offer, alongside the shortage of good paraplanners, finding a role that is enjoyable shouldn’t be too difficult.

Of course, it takes time and experience to develop preferences. In the meantime, all experience is good experience.

Finding an employer that has a culture of supporting and developing you is vital. This not only covers examination support and funding but day-to-day learning on the job.

It’s also crucial not to live only in the “bubble” of your workplace, as this can create blinkered vision. It is imperative to have contact with other paraplanners outside of your own firm to ensure you have your finger on the pulse of the paraplanning world.

A new route in

For those firms that do want to train up their own paraplanners, the NMBA is attempting to help by launching a paraplanner apprenticeship.

Although nearly shelved altogether due to a lack of government funding, it has just been awarded sufficient funds and the apprenticeship will get under way next February.

There is no minimum qualification or standard to become a paraplanner but the apprentices’ skills and knowledge will be assessed in a number of areas to meet the government-approved standard.

NMBA director Tom Hegarty says: “The government-approved apprenticeship standard for paraplanners requires one of the [Chartered Insurance Institute or Chartered Institute for Securities & Investment paraplanning-specific] Level 4 qualifications to be achieved, rather than the financial adviser qualifications, depending on which sector the paraplanner wishes to specialise.

Take up for both the CII Cert PFS (Paraplanning) and the CISI Accredited Paraplanner qualifications has been quite low, with most paraplanners choosing to take the exams advisers do instead.

CISI head of financial planning Jacqueline Lockie says the professional body is planning to turn this around: “Around 100 hold the Accredited Paraplanner designation with CISI but we are relaunching this to encourage more paraplanners to use their paraplanning designations with pride.”

Personal Finance Society chief executive Keith Richards did not give a figure for how many hold the CII Cert PFS (Paraplanning) title, noting that “although the CII introduced a dedicated paraplanning certificate, our experience is that most paraplanners set their stall out to be diploma-qualified, with many then taking advanced papers and going on to become chartered.”

Hoskin believes many of those you might call “career paraplanners” are worried about getting qualified to the level of advisers in case it will lead to them being pressured to advise clients as well. But she is confident this will not be the case for long, with it soon being recognised that for financial planners to really focus on their roles, they will need to work alongside paraplanners who understand the technical side better than they do.

She says: “In time, we will see a rise in academic knowledge and achievements in the paraplanning sector and you will probably see those in the planning sector not needing to be so qualified technically. But they will extend their skills and abilities in other areas like mediation, neurolinguistic programming and life coaching. That is where that role is going.

“Ideally, paraplanners should be more qualified than the planners they support.”

Allum is also optimistic, saying the profession is heading in the right direction because it is going its own way. He says: “It is younger and more gender-diverse than financial planning and the collaborative way of working is refreshing. There is a real buzz. It seems to be a profession of the future and it is one that is being shaped by people in it, rather than being dictated to by a regulator or anyone else.”

Expert view

Qualifications alone do not create effective paraplanners

The role of the paraplanner has specialised over the past few years, in the same way the adviser role has. The focus for paraplanners is now ensuring they are spending time on the more technical elements suited to their skill set. This has meant the adviser, paraplanner and administrator roles have become much more clearly demarcated.

Overall, I don’t see a huge change in the number of paraplanners out there. Some will naturally move into adviser roles, and the number of new paraplanners just isn’t high enough to offset that and achieve growth in this profession. In terms of qualifications, working towards a Level 4 Diploma makes sense, but we do find, as is the case in most professions, that a qualification does not make a good paraplanner.

They help, and can back up good experience and the right skills, but are not the be all and end all.

Anything that isn’t client relationship management, and business managing, should be handled by a support team of paraplanners, administrators, office managers, HR etc, depending on the size of the firm. The actual tasks will be carved out depending on the people and roles available.

Again, there is no one-size-fits-all; it’s what works best for that firm, to ensure the clients get the best possible service and experience.

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21st January 20193:05 pm

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